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Offline Rune

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The bitcoin death spiral has begun?
« on: January 15, 2015, 12:03:44 AM »

https://imgur.com/GAklIdZ

Seen on /r/buttcoin. This is really bad... Transaction backlog + miners shutting off due to falling price could cause a total panic run on bitcoin as people can't get their deposits to exchanges confirmed before the price has tanked further. If you hold bitcoins I'd suggest moving them to an exchange you trust asap.

<100 USD is starting to look realistic... This sucks.

Offline starspirit

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Re: The bitcoin death spiral has begun?
« Reply #1 on: January 15, 2015, 12:14:53 AM »
https://imgur.com/GAklIdZ

Seen on /r/buttcoin. This is really bad... Transaction backlog + miners shutting off due to falling price could cause a total panic run on bitcoin as people can't get their deposits to exchanges confirmed before the price has tanked further. If you hold bitcoins I'd suggest moving them to an exchange you trust asap.

<100 USD is starting to look realistic... This sucks.
I don't understand the point about transaction backlogs. I've had no issues moving BTC around...explain further?

Offline Ander

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Re: The bitcoin death spiral has begun?
« Reply #2 on: January 15, 2015, 12:21:30 AM »
Just a panic crash (which may not be over).  Bitcoin has seen worse in 2011 and recovered.
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Offline Rune

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Re: The bitcoin death spiral has begun?
« Reply #3 on: January 15, 2015, 12:25:21 AM »
Right now it'll take 3 blocks before a transaction with standard fee gets 1 confirmation, so transactions will get to 6 confirmations much slower than normal. Add to the fact that falling prices causes miners to shut down, but difficulty will stay high for almost another 2 weeks. This could cause transactions to get even slower. Slower transactions will likely be interpreted as a sell signal by traders, causing the price to fall more and more miners to shutdown and so on, exacerbating the death spiral further.

People have suggested that mining is so centralized at this point that they will likely coordinate to ensure difficulty can fall gradually along with the price. I really hope this will be the case. A hard landing would be really, really ugly for all of crypto.

Offline Akado

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Re: The bitcoin death spiral has begun?
« Reply #4 on: January 15, 2015, 12:29:12 AM »
I think if bitcoin drops that low, a new era for other cryptos will start. Bitcoin has been suppressing other alts with superior technology from going further, this might just be an opportunity for that to end and other projects can flourish, or at least, I like to think so.
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Offline edilliam

Re: The bitcoin death spiral has begun?
« Reply #5 on: January 15, 2015, 12:37:55 AM »
https://imgur.com/GAklIdZ

Seen on /r/buttcoin. This is really bad... Transaction backlog + miners shutting off due to falling price could cause a total panic run on bitcoin as people can't get their deposits to exchanges confirmed before the price has tanked further. If you hold bitcoins I'd suggest moving them to an exchange you trust asap.

<100 USD is starting to look realistic... This sucks.
I don't understand the point about transaction backlogs. I've had no issues moving BTC around...explain further?

Each new block in Bitcoin has a maximum size of 1MB. This amounts to a maximum of 7 transactions per second. So, if there is a sudden spike in the amount of transactions occurring above this limit then not all of them will make it into the next block. This is when a backlog of transactions occurs.

Offline islandking

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Re: The bitcoin death spiral has begun?
« Reply #6 on: January 15, 2015, 12:58:04 AM »
Should people sell BTS to buy bitUSD until the bloodbath ends?
« Last Edit: January 15, 2015, 01:01:38 AM by islandking »
I've been working on a new electronic cash system that's fully peer-to-peer, with no trusted third party. - Satoshi

Offline graffenwalder

Re: The bitcoin death spiral has begun?
« Reply #7 on: January 15, 2015, 01:10:55 AM »
Should people sell BTS to buy bitUSD until the bloodbath ends?


Exactly. We can only "guess" what *may *happen to the price. Nobody knows for sure. This is why short term trading is gambling unless you are a professional. It is much better to pick a long term investment and just hold for 2-3 years instead of day trading as a newbie.

Offline islandking

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Re: The bitcoin death spiral has begun?
« Reply #8 on: January 15, 2015, 01:15:08 AM »
Should people sell BTS to buy bitUSD until the bloodbath ends?


Exactly. We can only "guess" what *may *happen to the price. Nobody knows for sure. This is why short term trading is gambling unless you are a professional. It is much better to pick a long term investment and just hold for 2-3 years instead of day trading as a newbie.

Haha thanks. It's just that the price has been going so low...you start to doubt yourself.
I've been working on a new electronic cash system that's fully peer-to-peer, with no trusted third party. - Satoshi

Offline starspirit

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Re: The bitcoin death spiral has begun?
« Reply #9 on: January 15, 2015, 01:18:25 AM »
Sorry, but I don't see any new issue apart from a very deep bear market raising every band-wagon criticism possible as the herd gets very emotional. I'm not defending bitcoin here, just rationality.

From the perspective of establishing a global digital money, I don't see any problem with the following:

Volatility. Volatility is an unavoidable phenomenon in the early growth stages of any coin established by the free market that is vying for use as a global money. That is because it is not backed by any other form of existing money, and needs to establish its own value through use in exchange, with all the future uncertainty surrounding that. Any PoS, DPoS, or other coin with a similar aim would (and does) experience similar volatility. The only potential exception to this I can think of is if a coin is backed by a commoditised digital service, allowing initial stability till it finds greater use in exchange. Can anybody show another way that a free market digital money could be established without volatility, and without merely being a derivative of established money like fiat? The only argument I can see here is that it is just not possible for the free market to establish its own digital money, and I hope that's wrong.

Miners losing money. Gold was the best money standard for thousands of years. When the gold price rose relative to other commodities, it sent a profit signal to the market to explore/mine/extract more of it, thus bringing the price back into line with other goods in the economy. When the gold price fell relative to other commodities, it created losses for miners (e.g. if gold falls relative to energy costs of extraction). This incentivises miners to curtail supply in line with the reduced demand. Some might even stop operations, and dump any pre-mined gold on the market. Unfortunately business intentions are only implemented with a lag to market prices, so it takes time for supply and demand to smooth out. None of this has meant the gold mining industry has collapsed gold as a result. With Bitcoin there will be a similar dynamic. Too much mining capacity was put in place - now it is being necessarily consolidated. This also means many miners are dumping their BTC. But this is just part of a natural business cycle to be expected for mining - what's new in this situation?

Network security costs greater than adoption. All networks have a security cost (even DPoS), and whenever there is a bear market in currency price, the value attributed to the network by new adopters is by definition not covering this cost. Again this is unavoidable during bear cycles (which are themselves unavoidable - see volatility above). If Bitcoin is adopted by the mainstream, its network security costs will fall dramatically over time as a percentage of the network value. The real issue right now is the rate of adoption, not the network security costs (e.g. inflation to cover network costs only explains 10% of the fall in a year).

Merchants dumping bitcoin. Merchants never could hold the bitcoin! - they always keep limited funds on hand and need to recycle their revenues into new supplies. One could argue that merchants "dump" USD when they take their sales proceeds and buy new supplies. Besides that, they only sustain earning revenues in bitcoin if people buy bitcoin to use for this purpose.

On the other hand, possible valid criticisms are:

Network integrity can be maintained at much lower cost.
Transaction times are too long.
Centralisation of mining can affect the integrity of the network.
Scalability problems.
Other?

But note that these are NOT the current criticisms doing the rounds on the blogs and in the media - which leads me to think this is nothing more than a bear market, albeit deep, and with many emotions attached.


Online Stan

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Re: The bitcoin death spiral has begun?
« Reply #10 on: January 15, 2015, 02:07:25 AM »
Haha thanks. It's just that the price has been going so low...you start to doubt yourself.



Look on the bright side:
We have never been this close to third place!

« Last Edit: January 15, 2015, 02:14:28 AM by Stan »
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Offline xiahui135

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Re: The bitcoin death spiral has begun?
« Reply #11 on: January 15, 2015, 03:46:55 AM »
I think btc is going to die, because it is so replaceable.  Some new ones will take its place with lower cost and better efficiency.
I feel btc will have several drop this year.  And hope bts can get rid of affect by btc.

Offline xiahui135

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Re: The bitcoin death spiral has begun?
« Reply #12 on: January 15, 2015, 03:53:54 AM »

Just a panic crash (which may not be over).  Bitcoin has seen worse in 2011 and recovered.
Bitcoin have no such competition in 2011.  Now btc seems more and more useless because new tech appear and work better than btc.

Offline mint chocolate chip

Re: The bitcoin death spiral has begun?
« Reply #13 on: January 15, 2015, 04:55:15 AM »
Saw this venn diagram today, too funny not to share...


Offline Ander

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Re: The bitcoin death spiral has begun?
« Reply #14 on: January 15, 2015, 05:34:39 AM »
Someone just bought 2.5 million BTS on bter.  I've seen that on btc38 before but never bter.
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